Anna Wittich, left, with sign, and Magdalena Schoenmakers, seated, join locked-out Electro-Motive workers on the picket line Friday in London, Ont. The Caterpillar plant's unionized workers were locked out of the factory Jan. 1, 2012. (Mark Spowart for The Globe and Mail/Mark Spowart for The Globe and Mail)

Anna Wittich, left, with sign, and Magdalena Schoenmakers, seated, join locked-out Electro-Motive workers on the picket line Friday in London, Ont. The Caterpillar plant's unionized workers were locked out of the factory Jan. 1, 2012.(Mark Spowart for The Globe and Mail/Mark Spowart for The Globe and Mail)

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Anna Wittich (left, standing) and Magdalena Schoenmakers (sitting) join locked-out Electro-Motive workers on the picket line in London, Ont. Workers were locked out by the company, which is owned by Caterpillar Inc., on Jan. 1, 2012. Ms. Schoenmakers’ son-in-law works at the factory.
Mark Spowart for The Globe and Mail

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Meanwhile, the Detroit Three auto makers are set to sit down with the CAW this year, in their first, tense talks since they were battered by the 2008 financial crisis and in the cases of General Motors and Chrysler, bailed out by taxpayers.

“I expect that they are going to come tough at us,” said Ken Lewenza, national president of the CAW, who added that he feels the mutual respect between auto makers and his union, and the sacrifices workers already made in the depths of the crisis, will be positive factors in the talks.

He called the wage cuts and other proposals from Caterpillar “unprecedented” in Canadian labour history, and demanded that the federal government re-examine the sale of the plant to the U.S. company last year.

Caterpillar’s move is a “terrible signal” for other unionized workers across the country, he added, but the clash is stirring unions to fight back: “The proposals at Electro-Motive have truly galvanized the labour movement.”

Attempts to reach Electro-Motive for comment were unsuccessful. On its website, the company accuses the CAW of creating an “environment of uncertainty” and making “false allegations” about possible shutdown of the plant that it says are meant “to encourage violence at the London plant.”

The company also says the costs of wages and benefits at the plant are “more than twice” those at its unionized factory in La Grange, Ill. Plus, it says, “antiquated work rules” have rendered the London operation inefficient. (Mr. Lewenza says the union has improved productivity at the plant.) The Caterpillar lockout, and a similar move by Rio Tinto Alcan to lock out 800 unionized workers at a smelter in Alma, Que., are clear signs that some companies, shaken by economic uncertainty and increased global competition, are expected to get more aggressive at the bargaining table.

“I think it’s going to be a bad year,” said Charlotte Yates, Dean of Social Sciences and a labour studies professor at McMaster University in Hamilton, Ont. “Employers are emboldened. They are demanding more, they are more aggressive, they’re nasty. So the pressure is way more intense than I think we’ve seen it in a number of years.”

She added that unions, particularly in Ontario, suffer from “internal disorganization” and that the most powerful ones – the CAW and the United Steelworkers – are smarting from steep membership declines caused by the recession.

Craig Rix, a lawyer with management-side labour law firm Hicks Morley Hamilton Stewart Storie LLP in Toronto, said employers are going to be using hard bargaining, including potential lockouts, to make gains.

Wage increases were somewhat tamed during the recession. But now, he said, in addition to cutting pension and benefits costs, employers are also looking to increase flexibility and productivity by changing work rules, such as how shifts are set up.

“I fully expect employers will be looking closely at all of the tools they’ve got available to them to bargain hard,” said Mr. Rix, a former aide to federal Finance Minister Jim Flaherty when he was Ontario’s labour minister.

Those talks will be extra difficult with unions that were asked to make sacrifices in the depths of the financial crisis, he added.

“I think many unions believe they made their big concessions in their last round of bargaining, as a hedge against better times,” Mr. Rix said “And when they come the table this time round, the story isn’t going to play out that way. Organized labour has a lot of unrealistic expectations that are going to have to be managed.”

Why companies have the edge

Clearly, companies such as Caterpillar have the advantage in the coming showdown with labour. The biggest reason: there is little risk their employees will quit to take a job elsewhere. That’s because anyone with a job today has good reason to hold on to it.

The North American labour market remains incredibly weak even though the U.S. recession ended more than two years ago.

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